Submitted by: Justin Miller

It’s very easy as an American to assume that with all of our expendable income, we are the best place to sell consumer products. We are where the consumerist culture started. Everyone wants the newest cars, the biggest TVs and every exciting new gadget on the market. But with our current financial crisis, America may no longer be the best place to sell products. I’m not trying to say that Americans wont continue to buy things they don’t need, but they certainly aren’t going to be spending as much as they used to.

Our obsession with buying things that we can’t afford has lead to the current credit crisis as many Americans were not able to pay off the loans on their houses. We learned to buy the things we wanted with other people’s money, with the hopes that we could pay it off later. The following article is an example of how an “old” economy in rural India is functioning well despite the current global economic crisis.

Click here for the article in the Washington Post: Click here

In the article, it talks about a family who just bought a $10,000 brand new car. In cash. Yes, that’s right, they paid for it in cash. They don’t owe payments on it, it’s theirs. According to the article, the reason that the economy in rural India has been isolated from global economy is that most purchases are made in cash. People don’t have to worry about people being able to loan them the money they need because they are buying with the money that they have. Additionally, the Indian government has put a lot of money in investing in the infrastructure of it’s rural areas and the price for wheat has increased by 65% over the past four years. This has lead to an increase in disposable income for the rural farmers, which they are using to purchase new clothes, TVs, and cars.

The interesting thing about this rural economy is that companies are finding it much more profitable to market to the rural markets instead of the big cities. For example, 60% of car sales for General Motors India were from rural and small towns. This is an interesting contrast from the general tendency for companies to focus on the money to be made from big cities.

Awhile ago I read an article that said that Americans have been living lives that were outside of the their means, and that current market recession is the economy shifting back to where it would have been if we bought what we could afford. What do you think? What if Americans, like those in rural India, only bought everything cash? Would we have the current economic problems that we’re having? I’m not trying to say that all lending is bad, as some things, like buying a house, would be almost impossible without it, but how much lending does it take before it’s detrimental to our society?